Marketing: Return On Investment

It’s all about ROI and how to maximize it

There are a variety of gauges a business can use to measure the success of its marketing. But to really measure you must first know your goal. Was it money in the bank, build a database, find a new customer or create TOMA? All are noble goals of a marketer. To declare success we have to go out and measure, but take the extra step and do the hard work ahead of time by thinking through what really matters, what is actionable and what drives the business. Not doing that extra work first and tossing together a collage of gauges is not only lazy, but also dangerous to your business due to the level of distraction it creates. It is akin to using an airplane’s instrument panel to drive a car!

Are you ready to market? Be forewarned in advance that great marketing can kill a business.

Wait, what? How so?

Allow me to explain: many companies spend countless dollars marketing a sub-par product and mediocre service. But if you promote a ‘dog’ more people will know it’s a ‘dog’ no matter how it is portrayed. Marketing campaigns are important, but they can backfire if your staff isn’t trained to provide exemplary service. And, even if your staff is trained to provide great service, if they aren’t trained to sell effectively, your marketing ROI isn’t living up to its potential.

When (and only when) your restaurant is running at the optimal level of service, you can then let loose great marketing. Until then, it makes no sense to attract more guests into a restaurant that doesn’t wow the customer. The best scenario? Fix the product, make it outstanding, then market it. You can implement numerous marketing strategies such as TV or radio ads, newspaper coupons or signage. These external methods, however, aren’t nearly as important as what you do internally to get guests coming back.

The biggest asset in business is relationships (better than cash because they can be turned into cash over and over again). It’s a new era in restaurant business, the era of Relationship Marketing. If you haven’t jumped on the bandwagon yet, do it now.

Mag Retelewski, president and founder of Clarteza, a Chicago-based marketing consulting company, says, “The way a consumer experiences each marketing element has changed dramatically, especially in the areas of promotion, communication and advertising. The consumer is in the driver’s seat, and brands and services, including restaurant businesses, are switching from a ‘monologue’ with consumers, to a ‘dialogue’ where consumers directly engage with a brand or a product and collectively influence the overall state of consumer perception. Restaurant reviews on Twitter, Facebook or simply through word of mouth can make or break your restaurant, so treat your customers right and they will reward you; if not, they can break you.”

In this regard, our ROI is measured by the positive or negative buzz created by our restaurant. We must be invested in this relationship with the consumer to keep the buzz positive, respond to complaints, answer questions, address dietary concerns, tell your story and have the consumer embrace your culture. The No. 1 reason people will not come back to your restaurant is because they have encountered an attitude of indifference or unconcern by one or more employees. This accounts for 68 percent of why any restaurant will lose business. This is an issue that you can attend to by training on hospitality and the idea that the customer comes first! Build a relationship, boost your ROI.

We have heard it said time and again: ‘You get out what you put in.’ The National Restaurant Association reports that 52 percent of adults are likely to make a restaurant choice based on how much a restaurant supports charitable activities and the local community.

Retelewski adds: “Investigate the possibility of participating in an interesting event or promotion, something tied back to the community which can create some ‘buzz’ around your restaurant business that your customers will care about. Again, it’s about a bigger meaning and creating a conversation.”

Note this recent comment on my Facebook page: “I love Fox’s pizza because they have a great pizza, but I like the fact that they go out of their way to help out the community with fundraisers. That’s awesome. Thanks.” Here is someone who, along with his family, eats at my restaurant 3 to 4 times per week. Why? I have an established relationship with the family and that is reinforced by quality product and community activity.

So how does all this affect your bottom line? In its simplest form ROI is a calculation expressed as percentage:

ROI = [(Payback – Investment)/Investment)]*100

Your payback is actually the total amount of money earned from your investment in your company. Investment relates to the amount of resources put into generating the given payback. This is usually thought of as ‘how much did I spend on that ad?’ and ‘how much profit did I make from the sales it generated?’. In general it can be said that as long as the percentage is greater than zero your investment was good. Why? It is because our marketing goal is for long-term results. Even if you did not make your first million today, the foundation you are laying will produce greater results to build on during your next marketing campaign.

“Most important are fundamental marketing elements, such as defining your restaurant’s target market and positioning territory and the tailoring of your message to appropriate communication vehicles,’ says Retelewski. “Ideally, your marketing plan will be integrated, including multiple channels of communication to optimize your reach and allow for targeted messaging.”

Measuring ROI is a complex matter that can be approached in many different ways. Naturally, as a business we need to have a stable bottom line — we can also see that payback is a direct result of many marketing elements working together. You maximize your ROI when you and not just your message reach the consumer and touch their lives and their communities.